The flattening continues… Is the paradigm shifting? — Vacation Reading – Part 3

So on my last night of my “official” vacation I thought I would conclude the series with a post that refers back to my inaugural post from July 5th as well as pose some questions about what it could mean from a broader perspective. I just finished an article in the September 18th issue of BusinessWeek outlining how DuPount outsourced legal services to OfficeTiger a Business Process Outsourcer (BPO) recently acquired by R.R. Donnely & Sons Co.

According to the article DuPont aims to save 40% to 60% on document related work and cut $6 million from is $200 million dollar legal budget. Of course there is some associated risk but on the outskirts of Manila DuPont now has 30 Filipino attorneys, including three who have passed the U.S. bar exam. The attorneys sit elbow-to-elbow with 50 staff employees, working three shifts seven days a week they read, analyze, and annotate digital images of memos, payroll and medical records, old engineering specifications, and other documents that might be used as evidence in DuPont legal cases.

As a technologist working in the storage sector I spend a significant amount of time talking with customers about compliance and the need to facilitate e-discovery. We leverage software technologies like enterprise content management applications, Email archiving applications and full-text indexing to facilitate this. As software and hardware vendors we have a major hurdle to overcome, we have a fundamental inability to create meaningful metadata. Is it possible to automate the creation of meaningful metadata that eclipses the simple taxonomy we are capable of today? Does a BPOs ability to read, analyze, annotate, index and retrieve eliminate or decrease the need for such software products? With Asia also being a software development hotbed how long will it be before a BPO like OfficeTiger teams up with or organically grows a software development business to automate their processes hence lowering consumer cost? Where does this leave the software only vendor? Will they be at a disadvantage, with only the ability to offer a component of the total solution.

The obvious goal of outsoucing/offshoring is to cut cost but DuPont also hopes to reduce the evidence collection and processing time from 18 months to 3 months. This will be enabled by leveraging a global legal team operating 24/7. Office tiger will convert millions of archived paper records to digital format, code and index them; dramatically reducing the effort required to analyze the evidently data. It is not hard to see the cost benefits when the average salary for an attorney with five years experience in the Philippines, who has a very similar legal system to the U.S. is ~$30,000 including benefits. To put this in perspective that is about half what a veteran U.S. corporate paralegal earns and one-fifth what a first-year attorney can earn in in New York.

OfficeTiger believes that corporations are looking at more cost effective ways to buy legal services so cost does not become a variable when deciding to whether or not to defend a case. The need for alternative legal service could push OfficeTiger to ~1000 employees and hundreds of lawyers by the end of 2007. It looks to me like the paradigm is shifting in many of the markets where software vendors have focused, globalization will continue to morph the marketplace and the nimble will be best positioned to take advantage of the changes.

Read the full BusinessWeek article here .

-RJB

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